2005 (7) TMI 533 - AT - Customs

Summary

Issues Involved:
1. Confiscation of goods and imposition of redemption fine.
2. Demand of additional duty.
3. Imposition of penalty.
4. Validity of the show cause notice issued by the Additional Director General of DRI.
5. Alleged under-valuation of imported goods.
6. Admissibility and evidentiary value of the report from the Hong Kong Customs & Excise Department.

Issue-wise Detailed Analysis:

1. Confiscation of Goods and Imposition of Redemption Fine:
The appellant challenged the confiscation of reduced size toys and dolls of plastic and the imposition of a redemption fine of Rs. 10,00,000/- under Section 125(1) of the Customs Act, 1962. The Commissioner confiscated the goods based on the discrepancy between the declared value and the actual value as determined by the Hong Kong Customs & Excise Department. Since the goods were not available for confiscation, a redemption fine was imposed.

2. Demand of Additional Duty:
The Commissioner demanded an additional duty of Rs. 5,20,729/- under Section 28 of the Customs Act, 1962. This was in addition to the duty already paid by the appellant. The demand was based on the under-valuation of the imported goods as revealed by the investigation conducted by the DRI and corroborated by the Hong Kong Customs & Excise Department.

3. Imposition of Penalty:
A penalty of Rs. 10,00,000/- was imposed on the appellant under Section 112(a) of the Customs Act, 1962. The penalty was justified by the Commissioner based on the findings of under-valuation and the issuance of false invoices by the supplier at the request of the Indian importer.

4. Validity of the Show Cause Notice Issued by the Additional Director General of DRI:
The appellant contended that the show cause notice issued by the Additional Director General of DRI was beyond his jurisdiction as he was not a "proper officer" under Section 34(2) of the Customs Act. However, the Commissioner, referring to the Larger Bench's decision, held that the ADG of DRI, having been appointed as a Customs Collector, had the powers of a Customs Collector and could discharge functions as a "proper officer" under Section 28(1). Therefore, the objection against the issuance of the show cause notice did not survive.

5. Alleged Under-valuation of Imported Goods:
The investigation revealed a significant variance between the declared value and the actual value of the imported goods. The report from the Hong Kong Customs & Excise Department indicated that the CIF values stated in the invoices were false and much lower than the actual values. The appellant failed to provide a satisfactory explanation for the difference in values and could not produce the manufacturer's invoice as required under Rule 10 of the Customs (Valuation Rules), 1988.

6. Admissibility and Evidentiary Value of the Report from the Hong Kong Customs & Excise Department:
The Commissioner relied on the report dated 24-7-99 from the Trade Licensing Investigation Bureau of Customs & Excise Department, Hong Kong, as unequivocal evidence under Section 139(ii) of the Customs Act, 1962. The report indicated that the actual CIF values of the goods were much higher than the declared values. The authenticity of the report was not disputed by the appellant. The Commissioner applied the residual method under Rule 8 of the Valuation Rules to determine the value of the goods, as the transaction value could not be determined under Rules 5, 6, or 7.

Conclusion:
The Tribunal upheld the Commissioner's order, finding no valid ground for interfering with the impugned order. The appeal was dismissed based on the findings of under-valuation, the validity of the show cause notice issued by the ADG of DRI, and the evidentiary value of the report from the Hong Kong Customs & Excise Department.